City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy

 
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City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
City Power Alternative Energy Strategy
P re s e ntat i o n to P I ESA We b i n a r 2 4 J u n e 2 0 2 1

P a u l Ve r m e u l e n , C h i e f E n g i n e e r, R e n e w a b l e E n e r g y
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
E n e r g y a n d s u s t a i n a b i l i t y, a s p e c t s t o l o o k a t -

Greening of the supply, to meet carbon dioxide emission reduction targets in mitigation of
climate change risks –
     • By 2030, if the IRP is implemented ‘as is’ 34% of the energy generated in South Africa
       will be from carbon free sources. Some will be on Eskom networks, some on ours.
     • The City of Johannesburg – EISD - has a slightly higher green energy aspiration,
       targeting 35% of electricity usage from renewable energy sources by 2030.
     • For Johannesburg, this presently translates into 10 GWh of electricity per day, and if
       only from solar, this would mean that 2GW of PV generating capacity will be required.
Equally importantly - at the same time we need to:
• Improve the security of supply to all parts of the City
• Reduce the Cost of Supply from Eskom
• Reduce the cross-subsidy burden placed on Johannesburg’s C&I customers
• Build resilience against load shedding and the economic havoc that it causes
• Support EVs, an opportunity for the greening of transport, both public and private
• Economic Development - igniting regional ‘new energy’ industries, local first, Africa next
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
The electricity business of tomorrow –
  is being built on the business of today.

While improving and using the same grid, we are moving away
from the exclusive kWh business towards more of a network
              services based business model.
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
T h e J o b u r g M a r ke t - a f i n e 1 0 0 y e a r o l d i n s t i t u t i o n
   serving the community

                          An organized holding, trading and distribution system
                              equipped with a convenient trading platform

Diverse Producers                                                                 Diverse Buyers
Commercial farmers                                                                Supermarkets
Small holding producers                                                           Green Grocers
                                                                                  Restaurants           Some consumers
                                                                                                         may have their
 • Market certainty                                                                                    own veggie patch,
 • Bulk transport                                                                  • Food Security        but they still
   to one stop                                                                     • Competitive           depend on
 • Opportunity to                                                                    prices               produce that
   ‘gap-fill’                                                                      • Variety of        comes through the
 • Safety standards                                                                  products,           market. Some
   applied                       Cold storage facilities for temporal                generally          consumers don’t
                               management of produce, able to smooth                 available           have a garden.
                                out supply and demand mismatches                   • Quality control
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
City Power – another fine 100 year old institution, but …

                       A distribution system that is metered, currently working
                              as a sole agent for Eskom and Kelvin power

                                                                                  • Load shedding
                                                                                    disruptions
Few Suppliers
Eskom 90%                                                                         • Regulated,
Kelvin 10%                                                                          escalating
                                                                                    pricing             “Prosumers” are
                                                                                  • Captive with         installing their
                                                                                    limited options    own photovoltaic
• Eskom is proving                                                                                         generating
  unreliable                                                                                          systems to reduce
• Kelvin is close to                                                                                   costs and energy
  retirement                                                                                          storage systems to
• Both use ‘dirty’                                                           Diverse Consumers         ride through load
                                                                             Residential
  generating                                                                 Industrial                shedding. 44MW
  technologies                                                               Commercial               already permitted.
                             Geyser control systems can help to match                                  Some don’t have
                               supply and demand to some extent                                       suitable roof space
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
R e d u c i n g C o s t o f S u p p l y f r o m E s ko m

  • Peaky load costs a lot to service
  • As a grid operator, we do benefit from the
    diversity that the community connected to the
    grid demands
  • However, the more peaky the load of our own
    customers is, the more costly it becomes for us
    to both source the power and to deliver it.
  • In reality very few loads are flat –
  • Whatever can be done to remove the kinks in
    the load curve, will reduce costs of both cost         • The ideal load – a flat line – is
    drivers
                                                             a constant demand and a
  • The supplier of last resort – this will be Eskom         predictable quantity of energy
    or the future ISMO’s new role – will be the              to be delivered
    price setter
  • The price for capacity will most likely become         • All new energy options on our
    more and more costly over time, particularly             grids must contribute to this
    during peak load periods.                                objective
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
Analysing Current Energy Costs

                                  • The graphic shows the load
                                    profile of the Johannesburg 275
                                    kV power system
                                  • The morning and evening peak
                                    periods are when Eskom power is
                                    most expensive.
                                    Summer peak cost is 109 c/kWh.
                                    Winter peak cost is 333 c/kWh.
                                  • The average peak cost over a year
                         Kelvin
                                    is 165 c/kWh.
                                  • Stage 1 Load Shedding
            ‘Baseload’
            Eskom                   approximates to 120 MW for
                                    these intake points
                                  • The peak pricing extends all the
                                    way into the base-load portion of
                                    the load curve
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
We a r e d e s i g n i n g a n e n e r g y m i x t h a t r e d u c e s E s ko m
supply costs

                                                                          • The winter load profile
                                                                            could largely be flattened
                                                                            with a coordinated
                                                                            combination of:
                                                                              • 350 MW of PV
                                                                                generation
                                                                              • 250 MW (750 MWh)
                                                                                energy storage

                                                                          • Up to stage 1 load shedding
                                                                            can be averted by supplying
                                                                            load from energy storage
                                                                            systems

                                                                          • The same combination
                                                                            applied to the Summer Load
                                                                            curve can both flatten the
                                                                            profile and begin to reduce
                                                                            peak energy purchases
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
A n t i c i p a t e d M a r ke t Ev o l u t i o n

• Part of the unbundling of Eskom will mean evolving from the current artificially
  priced Eskom tariffs to a competitive Electricity Market
• In the short to medium term, it is likely that bulk supply from Eskom will only be
  made available on a TOU basis. (First indicated two years ago, the Muniflex
  tariff)
• For new energy alternatives, the trick will be to avoid long term price lock-in
  and to maintain future competitiveness
• It is most likely that Eskom will fairly quickly restructure tariffs to place much
  more emphasis on capacity charges, leading to new capacity market options
• Market dynamics – this is a fast changing environment and new technological
  developments will require continuous review of the generation plan
• The second part of unbundling will also mean restructure of the distribution
  industry, with possible creation of a trading and retail industry

  2020/2021 275 kV Network Charges:           2020/2021 275 kV Network Charges:
  Tx R 10,87 per kVA/m                        Tx R 11,62 per kVA/m
  LV Subsidy R 15,48 per kVA/m                LV Subsidy R 16,55 per kVA/m             Horizontally priced,
  Total : R 26,35 per kVA/m                   Total : R 28,17 per kVA/m                market driven pricing

           Increases are likely to accelerate over the next 5 years
City Power Alternative Energy Strategy Presentation to PIESA Webinar 24 June 2021 Paul Vermeulen, Chief Engineer, Renewable Energy
NERSA Concurrence on DMRE IRP Determinations 1 & 2.
What is still available in the IRP for our plans?

                                                             Eskom confirmed
                                                             as buyer (RMPPP)
                                                             Eskom also
                                                             confirmed as
                                                             buyer (IRP)

                                                          This part of the IRP is
                                                        intended for embedded
                                                          generation. It includes
                                                      primary energy sources for
                                                         the private sector, local
                                                            government, end
                                                       customers, as well as any
                                                      distributed energy storage
                                                                 capacity
Regulatory changes and latest proposed ERA amendments

 Promulgated New Generation Regulations-           Proposed ERA Schedule 2 Licensing Exemption
                                                   amendments –
 In order to procure power from IPPs, a
 municipal distributor must:                       • Embedded generation systems below 100
                                                     kVA, register only with Municipality
 • Prepare a technical and financial feasibility
   study for any new generation or energy          • Systems above 100 kVA and up to 10MW, to
   storage facilities                                register with NERSA
 • Apply to the DMRE for a Ministerial             • Systems above 10 MW will still require
   determination for the proposed new                NERSA licensing
   capacity, in terms of the IRP
                                                   • Generated power can only be used by an
 • Procure the new generating capacity by            ‘end user’
   following Public Private Partnership
   procurement process, with authorization         • Where grid is used to connect generating
   from National Treasury                            site to consumption site, entities must be
                                                     related to one another
N e w C i t y P o w e r t a r i f f t o e n a b l e W h e e l i n g a n d Tr a d i n g

 • Up until now, City Power has exclusively ‘wheeled’ Eskom and Kelvin energy
 • A sustainable new option is to offer our distribution grids for transportation services between all kinds of distributed
   energy sources to end customers, for the same ‘wheeling’ fee, so maintaining grid revenues
 • Time discriminated wheeling tariffs will promote co-investment in energy storage systems
 • Wheeling will cater for customers without suitable rooftops and connect them to those that do have and can partner
 • Trading schemes also allow customers to ‘neutralize carbon’ by facilitating access to the Carbon Tax offset mechanism
 • Wheeling has the potential to unleash significant private investment in clean energy at no cost to the City

                                                       City Power LPU Price: 147 c/kWh            LCOE < 107 c/kWh

                             Eskom Price: 107 c/kWh
                                                                                                        Proposed Wheeling
                                                                                                        Tariffs 2021/22,
                                                                                                        c/kWh:
                                                                                                        Peak periods – 29,3
                                                                                                        Standard – 35,0
Wheeling tariffs enable trading partners to generate at property A                                      Off peak – 43,0
for consumption at property B while sustaining City Power revenue
Energy Storage – ‘Swiss Army Knife’ of the new mix

                                                                       Note also:
    Energy Storage can be applied to:                                  Energy storage is not a primary
    • Optimizing energy procurement costs                              energy source. It is a facility that
    • Protecting the Economy                                           can change the time that the
                                                                       output from any low cost, true
    • Preserving overloaded distribution infrastructure
                                                                       primary energy source is used,
    • Unlocking property development                                   including coal fired generation.
    • Supporting densification
    • Optimizing Investment in renewable energy systems                While it is often associated with
                                                                       renewables firming, distributed or
    • Providing basic energy services                                  embedded energy storage on its
                                                                       own has significant DSM and
    However ~                                                          alternative energy integration
                                                                       potential for distribution system
    It all depends on where it is placed on the distribution network   operators.
    and how it is operated:
    • Benefits of stacking for better, improved DSM                    Great Economic Development
                                                                       potential exists
    • Putting storage at the door of the customer has advantages
Energy Storage Pays its own way
                                                                                                                                                           GL Cost Element
                                                                                                                                                               890000
          Analysis of simple break-even point of energy storage cost vs. maximum arbitrage potential of the Local Government Megaflex Tariff
                     1kWh Storage used for 6 days of the week, one shot per day, to shift 1kWh from peak to off-peak, all year round
                                                                                                                                                        Bulk Purchases: Eskom
                            Plant Parameters                                                        Megaflex 2020/21 Tariff Rates
                                                                                                   11kV Intake point, e.g. Randburg
Technology Aspects                                   Units     Value         Operational Aspects Energy                             Units  Value
Cost of Storage System                               $/kWh           345     HV Distribution System Losses                          %         4,00%
Storage System Expected Cycle Life                   Number        7000      MV / LV Distribution                                   %         3,00%
 Efficiency of Charge and Discharge cycle            %              80%      Value of Winter Evening Energy Arbitrage               c/kWh    305,11
                                                                                                                                                         Network Access Ch.
Finance Aspects                                      Units                   Value of summer Evening Energy Arbitrage               c/kWh      67,10             +
Simple payback period, no inflation considered       Years      9,14439      Loss-less average value of daily arbitrage             c/kWh     126,60
Rand to Dollar Exchange Rate                         Ratio        16,09      Average daily rate to re-charge system                 c/KWh      54,05      Off-Peak Energy
Local cost of Storage                                R/kWh      5551,05      Cycle cost to overcome system recharging losses        c/kWh      10,81             +
Capital loan interest rate                           %pa           5,0%      Cycle savings due shift of losses out of peak          c/kWh       3,80
Capital Loan Term                                    Years            10     Net average value of daily energy arbitrage            c/kWh    119,59     Standard rate Energy
Cost of Finance                                      R/kWh        -1514
Total financed plant cost                            R/kWh         7065      Operational Aspects Network and Demand costs           Units  Value
                                                                                                                                                                 +
Theoretical Plant Life, 6 days p/week, 1 cycle/day Years            22,4     Peak Period Duration                                   hours           2     Peak rate Energy
Expected Operational Lifespan                        Years            15     Demand reduction potential per kWh of storage          kVA           0,5
Charge / Discharge Cycles Required                   Number        4696      Monthly network charge per kVA                         r/kVA       9,43             +
Staff Operating costs                                R/kWh         1440      Monthly demand charge per kVA                          r/kVA      35,83    Network Demand Ch.
R&M Plant costs @ 10% of capital cost              R/kWh      555,105      *Daily
                                                                             Thisnetwork
                                                                                  savings isand demand
                                                                                             subject     charge
                                                                                                     to the     savings
                                                                                                            system beingpotential
                                                                                                                         in         c/kWh      74,44
                                                                            operation during the annual half hour peak.
Total Cost of Financed and Maintained Plant        R/Kwh         9060
                                                                                                                                                          Savings on these
                                                                           Total potential daily energy arbitrage and demand                             charges can pay for
LCOE over expected plant life 1 shot per day       c/kWh       192,94      charge reduction value of 1kWh storage                   c/kWh     194,03      storage services
From a Jo’burg perspective what do we know today?

                                                            At the same time we                                      Lots of local Energy
     National Capacity        We will still need Eskom                                   PV is Gauteng’s most
                                                             need to reduce our                                      Storage is key to the
     Shortage (Urgent!)      as our Backstop for a long                                  viable RE generation
                                                           dependence on Eskom                                      distribution industry’s
                                        time                                                    option
                                                                 and Kelvin                                                 future

   Gas Power Generation        Wheeling of not only         Gas for residential
                                                                                        Flexible load is needed,   Our MV cable networks
    will soon be viable in      Eskom power will          cooking and heating is a
                                                                                         EVs are flexible loads    are strong and in place
        Johannesburg          become the new norm              good option

                                                                                                                     We need to inform all
                               Residential customers       Our obligation to cross-                                customers of the value of
   Businesses with Energy                                                               Our affluent customers
                             with ES are protected and      subsidize low income                                      being part of a grid
    Storage are protected                                                               think independence is
                              can reduce the evening      residential sector will not                                     community
     from Load Shedding                                                                    their best option
                                       peak                        change
What are our best options?

        Find Own               Find Own             Find Own
      Capital – this is      Capital – this is   Capital – this is
         limited                limited            prohibitive

       Engage IPPs –          Engage IPPs –       Engage IPPs –
       this requires          this requires       this requires
      PPPs long term         PPPs Long term      PPPs long term

                                Customer
         Enable                                    Enable Gas
                             Energy Storage
       Wheeling and                               Prosumers /
                              Programs, DR
         Trading
                              back to back        Partnerships
E n e r g y Ta r g e t s t o m e e t t h e C i t y ’s C l i m a t e C h a n g e
mitigation commitments

 ENERGY TARGETS (MWh) Primary Energy            Baseline      2021/22    2022/23    2023/24    2024/25    2025/26   2026/2027         2027/2028   2028/2029 2029/2030
 Customer Embedded PV Generation - Own roof        78 894        89 413    105 192    126 230    147 269    175 320    201 618            236 682    280 512    350 640
 Customer Embedded PV Generation - Traded                0        3 506     12 272     52 596     87 660    175 320    201 618            236 682    280 512    350 640
 Municipal Building PV Generation                        0        6 487     14 026     31 558     38 570     47 336     61 362             70 128     87 660    105 192
 IPP/ FinancedMining Land PV program                     0            0      8 766     43 830    122 724    262 980    315 576            350 640    525 960    701 280
 IPP/ Financed Rooftop PV program                        0            0      8 766     35 064     52 596     87 660    105 192            122 724    140 256    175 320
 Lanfill Gas Generation and Solid WTE              26 079        26 079     26 079     26 079    249 612    249 612    249 612            249 612    249 612    249 612
 Natural Gas Generation                                  0            0          0          0     43 830     43 830    131 490            219 150    328 725    438 300
 Annual total clean energy targets (MWh)          104 973       125 485    175 101    315 357    742 261 1 042 058   1 266 468          1 485 618 1 893 237 2 370 984
 Balance taken from Eskom (MWh)                10 395 027    10 689 515 10 964 349 11 158 277 11 075 581 11 130 320 11 271 081         11 428 058 11 407 849 11 329 135
 Forecast Total Demand ( MWh)                  10 500 000    10 815 000 11 139 450 11 473 634 11 817 843 12 172 378 12 537 549         12 913 676 13 301 086 13 700 118
 Forcast Annual Load Growth %                       3,00%         3,00%      3,00%      3,00%      3,00%      3,00%      3,00%              3,00%      3,00%      3,00%

 Percentage of Eskom Power from Clean Energy        3,00%         3,00%      7,00%      12,00%      15,00%      18,00%       22,00%       22,00%      22,00%      22,00%
 Eskom Clean Energy (As per IRP)                  311 851       320 685    767 504   1 338 993   1 661 337   2 003 458    2 479 638    2 514 173   2 509 727   2 492 410
 Eskom Brown Energy                            10 083 176    10 368 829 10 196 845   9 819 283   9 414 244   9 126 862    8 791 443    8 913 885   8 898 122   8 836 725

 Business As Usual CO2 Emissions (Tons)        10 665 298    10 967 442 11 249 422 11 448 392 11 363 547 11 419 708      11 564 129   11 725 187 11 704 453 11 623 692
 Residual CO2 Emissions (Tons)                 10 345 339    10 638 419 10 461 963 10 074 585 9 676 547 9 381 692         9 072 617    9 233 306 9 260 963 9 241 800
 Annual CO2 Emission Reductions (Tons)            319 959       329 023    787 460 1 373 807 1 687 000 2 038 015          2 491 512    2 491 881 2 443 490 2 381 892

 Percentage of Clean Energy used in CoJ               4%            4%         8%         14%         20%         25%          30%          31%         33%         35%
Ta r g e t s t r a n s l a t e d i n t o g e n e r a t i o n c a p a c i t i e s

                                             Baseline     2021/22     2022/23    2023/24    2024/25     2025/26     2026/2027    2027/2028    2028/2029    2029/2030
          Key Performance Indicator
                                             2019/20       Target      Target     target     target      target       target       target       target       target
    EMBEDDED GENERATION (MW) - Primary
                      Energy
 Customer Embedded PV Generation - Own roof        45           51         60         72         84          100          115          135          160         200
 Customer Embedded PV Generation - Traded            0            2          7        30         50          100          115          135          160         200
 Municipal Building PV Generation                    0          3,7          8        18         22           27           35           40           50          60
 IPP/ FinancedMining Land PV program                 0            0          5        25         70          150          180          200          300         400
 IPP/ Financed Rooftop PV program                    0            0          5        20         30           50           60           70           80         100
 Lanfill Gas Generation and Solid WTE              3,5          3,5        3,5        3,5       33,5         33,5         33,5         33,5         33,5        33,5
 Natural Gas Generation                              0            0          0          0        20           20           60          100          150         200
 Annual total targets (MW)                        48,5         60,2       88,5      168,5      309,5        480,5        598,5        713,5        933,5      1193,5
 Annual capacity increments (MW)            n/a                11,7       28,3        80        141          171          118          115          220         260

 EMBEDDED ENERGY STORAGE CAPACITY (MW)
 Customer Owned Energy Storage                      0,4         3,3        6,7       16,7        26,7        33,3         36,7         40,0         43,3         46,7
 Capital funded CP owned Energy Storage             0,0         3,1        5,1        6,7         8,3        10,0         11,7         13,3         16,7         20,0
 IPP / Financed Energy Storage                      0,0         0,0        0,0        6,7        16,7        23,3         33,3         40,0         53,3         66,7
 Annual total targets (MW)                          0,4         6,4       11,7       30,0        51,7        66,7         81,7         93,3        113,3        133,3
 Annual capacity increments (MW)        n/a                     6,0        5,3       18,3        21,7        15,0         15,0         11,7         20,0         20,0

 TOTAL EMBEDDED GENERATION CAPACITY
 (MW) -
 Annual total targets (MW)                        48,9         66,6      100,2      198,5      361,2        547,2        680,2        806,8      1046,8       1326,8
 Annual capacity increments (MW)            n/a                17,7       33,6       98,3      162,7        186,0        133,0        126,7       240,0        280,0
Photovoltaic Generation Portfolio Options -

 • Customer ‘own consumption, own roof’ option –
     ➢ Our application process is in place, more than 44 MW has been commissioned
 • Customer ‘own consumption, different roof’ supported by wheeling and trading
     ➢ Our wheeling tariffs have been accepted by Council for 2021/22. NERSA engagement
       for approval is on-going.
 • City Owned PV, located on City buildings and properties
     ➢ As capital is made available, we will implement. R38 million application in the 2021/22
       capital budget
                                                                                                   ➢RFIs to be issued
 • IPPs on City owned land (e.g. disused mining land) feeding into the grid                        by September 2021.
 • IPP partnerships on private property (e.g. warehouse roofs) feeding into the grid               Process will lead to
                                                                                                   the establishment of
 • IPPs on private land within City limits (e.g. disused mining land)                              PPPs.

 • Energy traded in from the Eskom network
     ➢ This option will attract Eskom wheeling charges. In the case City Power is the off-taker,
       it requires the establishment of Public Private Partnerships, endorsed by Treasury.
Energy Storage Portfolio Options -

• City owned Energy Storage, located at City buildings and property
    ➢ As capital is made available, we will implement.
       Application for R35 million is in the 2021/22 capital budget
• Energy storage service providers (IPPs) located on City owned properties (e.g. substation sites and old
  transformer houses)
    ➢ The service is to be funded through the Bulk Purchases Operating Budget, RFI to be issued in September 2021

• Residential customer DSM and Energy Storage program, and
• Residential Sectional Title / Reseller customer DSM and Energy Storage program
    ➢ To partner with ESCOs to promote conversion to Time of Use Tariffs, coupled with the deployment of energy
      storage, renewable energy sources, gas cooking and heating appliances and DSM measures on a shared benefit
      basis.

• Key customer Energy Storage Program, aimed at:
    ➢ Promoting LPU customer investment in energy storage systems to reduce energy costs through tariff arbitrage
    ➢ At present to use as a protection measure against load shedding.
    ➢ Subsequently developed into a demand response scheme for the ISMO, with City Power as the aggregator
Energy projects funded from ‘Own Capital’

  Projects funded through the normal MFMA regulated Capital budget:

     • The City, guided by its Integrated Development plan compiles a CAPEX budget
     • The amount of capital available is dependent on the City’s balance sheet
     • The available capital is not sufficient to cover all of the City’s needs and aspirations - the
       budget is prioritized and allocations are made accordingly.
     • In the case of capital for City Power projects, our top priorities at present are network
       refurbishment, network expansion and electrification projects
     • In terms of power generation projects, limited capital funds are available for such projects
       and they are co-located and done in conjunction with energy efficiency projects on City
       owned buildings
     • Application is also made to the DME for Energy Efficiency and DSM funding from the Division
       of Revenue Act allocations from National Treasury
Energy projects funded from ‘Own Capital”

 • Capital Project Pipeline
       FY      Category    Project              Comment                                      Target    Budget
                                                                                                       Rm
       20/21   Renewable   First Phase EE and   Feasibility Studies for 23 buildings         3,7MW     8
               Energy      rooftop PV on City   complete, phase 1 to target first 3 large
                           Power and CoJ        buildings. Tender documents to be issued
                           Buildings            in July 2021

       21/22   Renewable   Second phase EE      Phase 2 to target the next 12 buildings,     8MW       30
               Energy      and rooftop PV on    continuing on above project
                           City Power and CoJ
                           Buildings
       21/22   Energy      Battery Energy       Specifications are being prepared to start   1,2 MWh   15
               Storage     Storage System for   procurement in July 2021
                           CP Reuven
                           Complex
       21/22   Energy      Battery Energy       Specifications are being prepared to start   4 x 1MW   30
               Storage     Storage, Feeder      procurement in July 2021                     6MWh
                           Relief Program
Energy projects funded through Green Bonds or IPPs

                               Energy Sustainability    Energy Sustainability     Energy Sustainability
       Status Quo
                                 Market Report           Decision Support        Scenario and Strategy

The Minister of Minerals and Energy Gazetted New Generation Regulations for
Municipalities, 16 October 2020:
   • A needs assessment and feasibility study must be done to initiate the process
   • Municipality must include the proposed energy mix in their Integrated Development Plans
   • Municipality must apply to the Minister for a determination on the technologies and capacities
     required
   • For CP, an RFI process will be conducted to confirm feasibility and test possible options
   • As capital funding arrangements are outside of the normal municipal CAPEX process, the
     Municipality must follow Treasury Section 16 regulations – the Private Public Partnership
     procurement process has to be followed
   • Typically, the PPP process will take 36 months to complete and is to be done on a ‘per project’ basis
   • The process requires the engagement of Transaction Advisors and National Treasury approvals
Energy projects funded through Green Bonds or IPPs

 Projects requiring the PPP procurement process:
      FY          Category     Project Pipeline     Comment                                     Potential   Investment
                                                                                                Yield       Potential
                                                                                                            R Bn
      21/22       Renewable    Large Rooftop        An RFI to be developed and                  50 MW       0,7
      For Impl.   Energy       Customer IPP         advertised in September. The concept
      by 2025                  Partner, PV          is to call for interest in an IPP program
                               program              that uses warehouse type PV rooftops
                                                    feeding into CP 11 kV network
      21/22       Renewable    IPP PV farm          An RFI to be developed and                  150 MW      1,3
      For Impl.   Energy       program for CoJ      Advertised by September. The concept
      by 2025                  owned old mining     is to offer old mining land, unsuitable
                               land / old Mining    for building construction for PV farms
                               Company land         within the City Limits
      21/22       Energy       Battery Energy       An RFI to be developed and                  25 MW       Fund from
      For Impl.   Storage      Storage System for   advertised in September. Energy             75 MWh      OPEX, Bulk
      2025                     Substations and      Storage IPPs can offer energy storage                   Purchases
                               Overloaded           services to CP for daily arbitrage                      Line Item
                               Feeders              revenues or source capital for BOT type
                                                    contracts
      21/22       Gas          Cottesloe Gas        An RFI to be developed and                  20 MW       1,8
      For Impl.   Powered      Powered              advertised in September. Cottesloe is
      by 2024     Generation   Generation Project   an existing Gas Turbine Site, the
                                                    proposal is to renew the generating
                                                    plant with modern technology
Energy projects funded by the private sector

    City Power has drafted wheeling tariffs for the 2021/2022 FY

       • This should allow ‘private generators’ to supply ‘private off-takers’ on the City Power
         grid, for equivalent revenues that would have been earned by supplying the end
         customer with conventional Eskom Power
       • The private off-taker remains a (captive) customer of City Power for network access
         and the balance of the power supply required
       • The City of Johannesburg’s commercial customers have access to significant capital
         funding, both the businesses and the property owners
       • All we aim to do is provide favorable business conditions (tariffs) and open grid access,
         and promote the concept
       • Traders may play an aggregating role. Use of system and clearing agreements in
         development
       • This is most likely the fastest route to economic development in the energy space
Energy projects funded by the Private Sector

• Customer partner programs
        FY      Category      Project            Comment                                       Potential   Private
                                                                                               2030        investment
                                                                                               Target      Value
        21/22   Renewable     Customer trading   To promote customer investment in PV          200MW       2,6 Bn
                Energy        and Wheeling       systems offering the Grid for trading and
                              Program            wheeling, earning revenues from the
                                                 ‘transport’ of energy.

        21/22   Energy        Residential and    To promote investment in energy storage       30 MW       0,3 Bn
                Storage and   Sectional Title    and DSM at residential customers, aimed       90 MWh
                DSM           ESCO partnership   specifically at reducing the evening peak
                              program
        21/22   Energy        Customer Energy    Target our top 300 key customers with         100 MW      2,1 Bn
                Storage       Storage Program    tariff incentives to make their own           300 MWh
                                                 investment in BESS systems, assimilate into
                                                 a Demand Response Program for back to
                                                 back Contract with Eskom.
        21/22   Gas           Gas Prosumer       There are Gas Generators willing to           30 MW       0,9 Bn
                Powered       Program            unlock developments with Gas Powered
                Generation                       Generation, with surplus for sale to City
                                                 Power
Presentation Conclusion

                          Thank you
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